Tag: Equity Mutual Funds

Small cap inflows dip in January, large and midcap funds shine: Where should you invest now?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Equity mutual funds have continued their upward trajectory, marking the 35th consecutive month of inflows. According to data released by the Association of Mutual Funds in India (AMFI), the latest figures for January 2024 reveal a surge in inflows, reaching ₹21,749 crore.

However, a closer look at the data reveals interesting dynamics within different categories of equity mutual funds.

In January, small-cap funds witnessed an inflow of ₹3,257 crore, reflecting a marginal decline from ₹3,857 crore in December 2023.

On the other hand, largecap funds witnessed inflows of around ₹1,287.05 crore as against an outflow of ₹280.94 crore in December.

Mid-cap funds, however, emerged as a focal point of increased investor interest, with an inflow of ₹2,061 crore in January, up from ₹1,393 crore in the previous month.

The shift in preferences among investors has sparked discussions within the industry about the factors driving these changes.

Sunil Subramaniam, MD & CEO of Sundaram Mutual Fund, highlighted the premium positions of midcaps and smallcaps, stating, “The midcaps are at a 14% premium, and smallcaps at a 22% premium. So from a retail investor’s perspective, I think the guidance from the AMCs, or its distribution partners, has been very good.”

He also emphasised the success observed in the large-cap and larger midcap flows, attributing it to robust Systematic Investment Plan (SIP) numbers and a continued trend of investors taking a medium-term view of the market.

Anthony Heredia, MD & CEO of Mahindra Manulife Mutual Fund, provided insights into the evolving trends, stating, “This is the first couple of months we are seeing a reasonable decline in the smallcap. In fact, more than the net flow, look at the gross flow. The gross flows on smallcaps are less than 15% of the total flows.”

He suggested a shift in investor focus towards large and midcap funds, as well as flexi and multicap funds, which he views as key products in the current market landscape.

In light of the data, industry experts see opportunities for fund managers to diversify.

Subramaniam noted the favorable conditions created by the significant Foreign Investor Investment (FII) outflow of ₹25,000 crore in January, presenting a valuable opportunity for fund managers to pick up quality stocks that were sold off.

Despite the Reserve Bank of India’s decision to maintain the status quo on various bank rates and continue with a withdrawal of accommodation stance, Gopal Kavalireddi, Vice President of Research at FYERS said that the equity market remains subject to both domestic and international data points and events that could induce volatility.

As the current earnings season shows signs of improved operational management by companies, Kavalireddi advises investors not to be unduly worried.

Instead, he suggests reallocating capital by diversifying investments appropriately across undervalued asset classes and geographies.

In a market influenced by both positive and challenging factors, this strategic approach can help investors navigate uncertainties and capitalise on opportunities.

Melvyn Santarita, Analyst, Morningstar Investment Research India Private Limited suggested investors to note that while both the midcap and the small cap categories have the potential to deliver good returns, these categories inherently are volatile with sharp drawdown risks.

“Therefore, investors should have a long-term time horizon while investing in these categories. Opting to invest in these categories via the Systematic Investment Plan (SIP) route is a good way by which investors can ride the volatility whilst dollar cost averaging over long periods,” he said.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

November AMFI data trends: MF industry AUM nears ₹50 lakh crore-mark, 33 months of equity inflows, more

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The November 2023 mutual fund industry data released by Association of Mutual Funds in India (AMFI) highlighted some key insights. While mutual fund industry’s assets under management (AUM) reached ₹49.04 lakh crore in the month, equity funds witnessed net inflows marking it the 33rd consecutive month of net inflows.

Here are key trends revealed by the AMFI data:

Mutual fund industry AUM nears ₹50-lakh crore landmark

The total assets under management stood at ₹49.04 lakh crore in November versus ₹46.71 lakh crore month-on-month (MoM).

According to Gopal Kavalireddi, Vice President of Research at FYERS, the benchmark indices hitting all-time highs in November boosted the mutual fund industry.

“Equity AUM hit an all-time high on the back of excellent performances from Nifty 50 (5.52%), Nifty mid cap 100 (10.37%) and Nifty small cap 100 (12.03%),” he said.

Equity funds see inflows for 33rd consecutive month

The equity segment continued its buoyant trend for the 33rd consecutive month of positive net flows in November. Mid- and small-cap equity funds continue to receive the bulk of the inflows, accounting for 41% out of the total equity inflows.

Small-cap funds saw the highest inflows among equity funds at ₹3,699 crore, trailed by mid caps at ₹2,666 crore and sector/thematic funds at ₹1,965 crore.

Fund flows into large caps continue to be tepid, but investors continue to opt for index funds, pouring in ₹1,353 crore for the month.

“Both the mid-cap and the small-cap indexes have seen a sharp rally over the last six months and one year. Consequently, investors have also flocked to this category with ever increasing flows,” said Melvyn Santarita, Analyst at Morningstar Investment Research.

Santarita, however, added that these categories are inherently volatile with sharp drawdown risks. Therefore, investors should have a long-term time horizon while investing in these categories.

“Opting to invest in these categories via the SIP route is a good way by which investors can ride the volatility whilst dollar cost averaging over long periods,” he added.

SIP contributions cross ₹17,000-crore mark for the first time

The Indian mutual fund industry has witnessed an unprecedented surge in systematic investment plans (SIPs).

According to data released by AMFI, SIP contributions soared to a historic high of ₹17,073.30 crore in November.

Debt funds see outflows

Debt mutual funds have witnessed an outflow of ₹4,706.75 crore in November against ₹42,634-crore inflow reported in October. Except for five categories — money market, long duration, banking and PSU, gilt and floater — all other categories saw net outflows.

Multi asset funds see largest inflows in the hybrid category

The multi asset category has seen the largest inflows in the hybrid category, second only to arbitrage.

Investors seem to be diversify across other asset classes like commodities and want to participate in multi asset funds, said Anand Vardarajan, Business Head, Institutional Clients, Banking, Alternate investments & Product Strategy, Tata Asset Management.

“Arbitrage flows continue to be very strong. Yields coupled with tax attractiveness continue to attract investor interest in this category,” he said.

NFOs raise ₹2,583 crore in the month

A total of 14 schemes were launched in November 2023 in both open-ended and close-ended categories, raising a total of ₹2,583 crore. Six schemes were from the equity category and accounted for ₹1,907 crore of funds collected in the month.

“November witnessed the launch of three sectoral/thematic funds (Aditya Birla Sun Life Transportation and Logistics Fund; Kotak Consumption Fund; quant Momentum Fund) and they cumulatively garnered ₹1,315 crore. Similarly, Helios Flexi Cap Fund managed to garner ₹551 crore thus aiding the flexi cap category which managed to cumulatively garner ₹1,667.5 crore during the month,” said Melvyn Santarita, Analyst, Morningstar Investment Research.

Gold ETFs dip to ₹333 crore

The quantum of net flows in gold ETFs dipped to ₹333 crore in November from ₹841 crore in October.

With the ongoing geopolitical tensions, US inflation still higher than the desired number, the appeal of gold as a safe haven and hedge against inflation should continue.

“Recently, gold prices in dollar terms scaled new highs after going past the $2,100 per ounce mark. Given this backdrop, there could be some profit-booking in the near term. However, with the perceived risks overall, flows could continue to be positive going ahead,” said Santarita.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Equity mutual fund inflows drop 22% in November, debt schemes see outflows

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Equity mutual fund inflows dropped around 22.16% in November 2023, as reported by the Association of Mutual Funds in India (AMFI). The segment recorded ₹15,514.5 crore inflows in the month versus ₹19,932 crore in October.

The small-cap fund inflow declined to ₹3,699 crore as against ₹4,495 crore in October. The midcap fund inflow edged higher to ₹2,666 crore in November versus ₹2,409 crore, the data showed. Large-cap fund inflows scaled down to ₹307 crore, a considerable drop from the ₹724 crore observed in October.

Equity Linked Savings Scheme (ELSS) inflows also experienced a decline to ₹104.4 crore from ₹266 crore recorded in October.

The total debt scheme outflow amounted to ₹4,706.7 crore, diverging significantly from the ₹42,634 crore inflow reported in the prior month. Liquid fund outflows amounted to ₹644.7 crore in November, diverging sharply from the ₹32,964 crore inflow observed in October.

Additionally, credit risk funds witnessed an outflow of ₹253.7 crore, contrasting the ₹142 crore outflow recorded in October. The corporate bond fund segment witnessed an outflow of ₹1,578.4 crore, deviating from the ₹1,940 crore inflow registered in October.

In contrast, hybrid fund inflows surged to ₹13,538 crore, demonstrating a significant increase from the ₹9,907 crore recorded the previous month.

Exchange-Traded Fund (ETF) inflows underwent a substantial change, standing at ₹833.62 crore in November, compared to ₹4,769 crore in October.

Overall, the total assets under management stood at ₹49.04 lakh crore versus ₹46.71 lakh crore (MoM).

In terms of systematic investment plans (SIPs), the number topped the ₹17,000 crore level for the first time in November. During the month, the SIP book stood at ₹17,073 crore against ₹16,928 crore in October.

Commenting on the same, NS Venkatesh, CEO at AMFI, said, “As we approach the end of another year, it’s time to celebrate the positive growth and success of the Mutual Fund Industry. The AUM has been increasing steadily, reflecting the growing trust and confidence of investors. We believe this trend will continue through December as well and the numbers will continue to remain positive.”

Notably, the Indian stock markets noticed an upturn in November 2023. The Nifty 50 index marked a 6% upswing. Of particular note, the Smallcap 250 index emerged as the frontrunner with 10% growth.

According to data analysed by brokerage firm Motilal Oswal, the Nifty Smallcap 250 index surged by 10.22% in November 2023.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Equity mutual fund inflows surge in October, large-cap category see inflows after six months

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Equity mutual fund inflows surged to ₹19,932 crore in October 2023 versus ₹13,857 crore in September, as reported by the Association of Mutual Funds in India (AMFI). What’s even more noteworthy is that all three major categories, including mid-cap, small-cap, and large-cap funds, attracted significant investments, with each of them showing positive inflows.

Small-cap funds registered an influx of ₹4,495 crore in October, compared to ₹2,678 crore in September, underlining the growing interest in smaller companies and their potential for growth. The category’s Average Assets Under Management (AAUM) also crossed the significant milestone of ₹2 lakh crore for the first time in its history.

The most significant shift was witnessed in the large-cap category, which witnessed a turnaround. After six months of outflows, large-cap funds saw inflows of ₹724 crore in October, indicating renewed investor faith in established companies. Mid-cap funds also saw a substantial increase in investments, with inflows totaling ₹2,409 crore in October, as opposed to ₹2,001 crore in the previous month.

Equity-Linked Savings Schemes (ELSS) attracted ₹266 crore inflows, a notable improvement from the ₹141 crore outflows in September. Dividend yield funds also experienced a boost, with inflows amounting to ₹397 crore in October, compared to ₹255 crore in September.

Hybrid funds received investments worth ₹9,907 crore in October. Liquid funds, while still witnessing outflows, saw a significant reduction in the amount, with ₹32,964 crore in outflows in October, compared to ₹74,177 crore in September.

Exchange-Traded Funds (ETFs) attracted ₹4,769 crore in October, surpassing the ₹3,243 crore inflows in September. Conversely, credit risk funds saw an outflow of ₹142 crore in October, a notable change from the ₹315 crore inflow in September.

Debt schemes experienced a positive shift with inflows of ₹42,634 crore in October, compared to outflows of the same amount in September. Meanwhile, corporate bond funds saw an influx of ₹1,940 crore in October, contrasting with the outflows of the same amount in September.

A total of 14 New Fund Offerings (NFOs) were launched in the month, garnering ₹3,638 crore, with ₹2,996 crore flowing into only 4 equity schemes from the multi-cap, small-cap and thematic fund categories.

The total Assets Under Management (AUM) in the mutual fund industry reached ₹46.71 lakh crore in October, compared to ₹46.58 lakh crore the previous month, reflecting overall stability in AUM.

According to Akhil Chaturvedi, Chief Business Officer, Motilal Oswal Asset Management Company, in the month of October, the equity markets continued to experience a risk-off sentiment, with the Index falling below 19,000 levels.

“Despite this fall, equity mutual funds continued to exhibit resilience. This trend reflects the prevalent risk-off sentiment in the market, with investors seeking to diversify their investments while maintaining a focus on capital protection. Domestic flows continue to prove structural,” he said.

Commenting on the numbers, Gopal Kavalireddi, Vice President of Research at FYERS said, “The month of October saw an FII selling of ₹29,057 crore, which was aptly countered by the DII purchase of ₹25,106 crore of equities. This was well supported by the retail money through Systematic Investment Plans (SIPs), which rose to a record high of ₹16,928 crore. The total SIP inflows since January 2023 stands at ₹1.49 lakh crore, at an average of ₹14,905 crore on a monthly basis.”

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Key trends from September’s AMFI data: Equity resilience, gold ETF fluctuations and more

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The September 2023 mutual fund industry data released by Association of Mutual Funds in India (AMFI) highlighted some key insights. While equity mutual fund inflows slipped month-on-month, it still remained healthy at ₹13,857 crore. Mid-cap and small-cap funds continued to attract investments, while large-cap funds experienced outflows.

Here are key trends that AMFI data showed:

Equity mutual funds show resilience

Despite foreign portfolio investors (FPIs) turning pessimistic towards equity due to US yield increases and global challenges, equity remains a magnet for inflows, signalling a sustained shift in Indian investors’ risk appetite. The number of folios continues to rise for active equities, hybrid, and index funds and ETFs, indicating that equity remains favoured by investors across the board.

Ashwini Kumar, Head, Market Data at ICRA Analytics, said equity-oriented schemes continued to witness a strong uptick in demand backed by a sense of optimism around India’s economic growth prospects.

“FII inflows, too, have led to rise, including comparative economic factors around the globe,” he said.

Debt funds face challenges

Debt funds faced a substantial outflow of approximately ₹1 lakh crore, marking the highest in the last six months. This suggests a significant shift in the risk perspective of both institutional and individual investors. Total assets under management (AUM) for debt funds declined significantly.

Hybrid funds and dynamic asset allocation shine

Hybrid funds, which offer a mix of equity and debt, witnessed substantial inflows, indicating a growing preference for balanced portfolios.

“This move towards aggressive risk allocation is evident in the heavy outflow from debt funds, particularly pure debt funds, while hybrid funds experience a windfall of inflows. Investors are increasingly favouring dynamic asset allocation over traditional pure debt funds,” said Kislay Upadhyay, smallcase manager, and Founder of FidelFolio Investments.

Small caps remain the favourite of small investors

Small investors continued to show a strong inclination towards small-cap funds, with the number of folios increasing by 6% month-on-month (MoM). This marks the fourth consecutive rise in the number of folios for small-cap funds. Larger investors, on the other hand, adopted a risk-off approach, with net inflows being higher in sectoral funds alone.

“Broad market indices, including Nifty 50, reached new all-time highs, with the Nifty 50 crossing the 20,000 mark for the first time ever. The Nifty Midcap 150 and Nifty Smallcap 250 indices outperformed large-cap indices, indicating robust performance in the mid- and small-cap segments. Consequently, mid- and small-cap funds received substantial net inflows, while large-cap funds experienced slower net outflows,” Viraj Gandhi, CEO of SAMCO Mutual Fund said.

SIP momentum continues

The power of systematic investment plans (SIPs) remained evident, with continued growth to ₹16,402 crore, up from ₹15,814 crore in the previous month. This indicates that investors have embraced the benefits of systematic investment and are likely to continue this strategy.

Gold ETF fluctuations

The quantum of net flows in Gold ETFs fell to ₹ 175.29 crore in September from ₹ 1,028.06 crore in August. However, the appeal of gold as a safe haven and hedge against inflation is expected to continue due to ongoing interest rate hikes in the US and economic uncertainties, said Melvyn Santarita, Analyst, Manager Research at Morningstar Investment Adviser India.

NFO launches

A total of 16 new fund offers (NFOs) were launched in September, with five hybrid categories garnering ₹5,233 crore, followed by six equity-oriented schemes with ₹2,503 crore and ₹59 crore in other schemes.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Equity mutual fund inflows positive despite monthly dip, thematic funds lead the way

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Equity mutual fund inflows showed resilience in September 2023, although they slipped month-on-month. According to data from the Association of Mutual Funds in India (AMFI), equity mutual funds attracted net inflows of Rs 13,857 crore. This indicates a robust trend in equity-oriented investments, marking the 31st consecutive month of net inflows.

This comes at a time when equity markets have experienced a notable shift towards a risk-off sentiment, following the all-time high of 20,200 points.

New fund launches boost segment

The equity segment in September received a significant boost with the introduction of six new fund launches, collectively accumulating Rs 2,503 crores in investments, said Melvyn Santarita, Analyst – Manager Research at Morningstar Investment Adviser India.

This highlights the sustained interest in the equity market and investor confidence in new investment opportunities.

Smallcap and midcap funds continue to shine

Smallcap and midcap funds maintained their appeal among investors, with both categories experiencing positive inflows. Smallcap fund inflows stood at Rs 2,678 crore, albeit a reduction from August’s Rs 4,265 crore. Similarly, midcap funds, while still attracting investments, saw a decrease in inflows, declining from Rs 2,512 crore to Rs 2,001 crore.

“The dip in the net flows of these categories could be attributed to some bit of profit booking by investors coupled with concerns regarding inflated valuations in some of these segments,” Santarita said.

According to Akhil Chaturvedi, Chief Business Officer, Motilal Oswal Asset Management Company, small-cap flows’ decline can be attributed to certain fund houses temporarily halting inflows, possibly due to concerns about rich valuations in the mid and small-cap space.

The midcap and small-cap indexes have seen significant rallies over the last six months and one year. Consequently, investors have been flocking to these categories, resulting in increasing flows. However, it’s important to note that both midcap and small-cap categories are inherently volatile, with sharp drawdown risks.

According to Santarita, investors should have a long-term time horizon when investing in these categories. Utilising the Systematic Investment Plan (SIP) route for investments can help mitigate volatility through dollar-cost averaging over extended periods.

Sectoral/thematic funds lead the way

Among the equity asset classes, sectoral/thematic funds stood out with the highest inflows, amounting to Rs 3,146.8 crore. The surge in this category’s popularity can be attributed to the launch of four new funds in September, cumulatively attracting Rs 1,629 crore, Santarita said.

This trend follows the significant inflows in August 2023, where this category led with Rs 4,805.81 crore.

Multicap category benefits from new launch

The multi-cap category witnessed an upswing in inflows, driven by the launch of a new fund, the WhiteOak Capital Multi Cap Fund.

“This category recorded net inflows of Rs 2,234.5 crore, with the WhiteOak Capital Multicap Fund garnering Rs 411 crore. The data reflects investors’ appetite for diversified investment options,” Santarita said.

Categories with net outflows

In contrast to the overall trend, two categories saw net outflows in September 2023. Equity-Linked Savings Schemes (ELSS) experienced outflows of Rs 141.15 crore, while the large-cap category saw net outflows of Rs 110.6 crore. Notably, this marked the fifth consecutive month of net outflows for large-cap funds.

“Active large-cap funds have been facing increasing competition from passive funds, prompting some investors to opt for the passive route. Passive funds, including index funds and ETFs, continue to attract healthy net inflows month after month,” Santarita said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Equity mutual fund inflows slip in September, debt fund outflows see sharp rise

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Equity mutual fund inflows slipped month-on-month in September 2023, but remained healthy at Rs 13,857 crore, according to Association of Mutual Funds in India (AMFI) data. Midcap and smallcap funds continued to attract investments, with both categories showing positive inflows. In contrast, large-cap funds experienced outflows during the month, the data showed.

Smallcap fund inflows stood at Rs 2,678 crore, a reduction from the Rs 4,265 crore recorded in August. Midcap funds, while still attracting investments, saw a decrease in inflows, from Rs 2,512 crore to Rs 2,001 crore.

According to Akhil Chaturvedi, Chief Business Officer, Motilal Oswal Asset Management Company, small-cap flows’ decline can be attributed to certain fund houses temporarily halting inflows, possibly due to concerns about rich valuations in the mid and small-cap space.

The most striking movement was witnessed in debt funds, where outflows surged significantly, primarily due to September marking the quarter-end. Debt equity fund outflows skyrocketed to Rs 1.01 lakh crore, compared to Rs 25,873 crore in the previous month.

Hybrid funds witnessed steady inflows, amounting to Rs 18,650 crore, surpassing the figures of August, which were at Rs 17,082 crore.

“This trend reflects the prevalent risk-off sentiment in the market, with investors seeking to diversify their investments while maintaining a focus on capital protection,” Chaturvedi said.

Liquid funds, on the other hand, saw substantial outflows, totalling Rs 74,177 crore, a sharp increase from the Rs 26,824 crore in outflows recorded in August 2023.

Exchange-traded funds (ETFs) experienced an upswing in investor interest, with inflows of Rs 3,243 crore compared to Rs 1,863 crore the previous month. Dividend funds saw a positive inflow of Rs 255 crore, while Equity-Linked Savings Schemes (ELSS) witnessed outflows amounting to Rs 141 crore. Corporate bond funds also faced outflows amounting to Rs 2,460 crore, while large-cap funds recorded outflows of Rs 111 crore.

Meanwhile, the Systematic Investment Plan (SIP) inflows stood at Rs 16,402 crore versus Rs 15,814 crore inflows in August 2023. The cumulative Asset Under Management (AUM) for the mutual fund industry stood at Rs 46.58 lakh crore as of September 30, as indicated by the AMFI data.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Mutual funds in August 2023: A deep dive into equity MFs’ flows

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Equity mutual funds, often considered a barometer of retail and institutional investor sentiment, saw a substantial net inflow of Rs 20,161 crore in August 2023. This surge marked a significant departure from the Rs 7,505 crore recorded in July, establishing August as the month with the highest mutual fund inflows in the past five months.

Small caps surge ahead

Leading the charge in this mutual fund influx were small-cap funds, which continued their impressive performance from previous months. These funds, characterised by their focus on smaller companies, drew the highest net inflows in August. This was followed closely by thematic/sectoral funds and multicap funds, as reported by Akhil Chaturvedi, Chief Business Officer at Motilal Oswal AMC.

Melvyn Santarita, Analyst – Manager Research at Morningstar India, highlighted that despite concerns about overvaluation, both small-cap and mid-cap categories continued to attract substantial inflows. The multicap category also experienced increased flows, buoyed by the launch of the Mirae Asset Multicap Fund.

As more investors participate in the market, the traditionally crowded space of large-cap stocks is undergoing a transformation. Smaller companies are gaining more attention, and while some pockets of small-cap stocks may be experiencing overvaluation, the broader trend of increasing market breadth signifies the deepening of India’s capital market, experts say.

Maturity in retail investor behavior

Kislay Upadhyay, Smallcase manager and Founder of FidelFolio Investments, observed that retail investors are displaying a more mature approach to their investments.

“What’s fascinating is that this mature behavior is mirrored across both large and small investors, as evidenced by the corresponding trends in the number of folios and net inflows. This suggests a widespread shift towards active equity funds and a growing sophistication in investment strategies among investors of all stripes,” he said.

Manish Mehta, National Head – Sales, Marketing & Digital Business at Kotak Mahindra Asset Management Company, noted a trend of “sell on market highs and purchase on lows” in the higher equity net sales for August. This behavior was further influenced by collections through new fund offerings (NFOs) in the equity and hybrid category.

Caution amidst the rally

While both mid-cap and small-cap indexes have experienced sharp rallies over the past six months and one year, investors are reminded of the inherent volatility and drawdown risks associated with these categories. Therefore, a long-term investment horizon and the SIP route are recommended strategies for navigating this volatility while capitalising on potential returns.

According to Mukesh Kochar, National Head, Wealth Management at AUM Capital, investors should rebalance their portfolios by increasing exposure to large-cap funds.

“Due to overrun by small-cap space the overall exposure must have increased in this space which needs to be rebalanced,” he said.

Outflows in specific categories

It’s worth noting that not all categories experienced positive net inflows. Focused funds, large-cap funds, and Equity Linked Savings Schemes (ELSS) saw net outflows in August. Large-cap funds, in particular, have faced challenges in beating passive funds, possibly leading some investors to opt for passive investment routes.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Key trends from May AMFI data: Equity and debt funds see less inflows, gold ETFs continue to glitter and more

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The May 2023 mutual fund industry data released by Association of Mutual Funds in India (AMFI) highlighted some key insights. While the equity mutual funds witnessed a net inflow at Rs 2,906 crore in May 2023, the total debt scheme saw an inflow at Rs 45,959 crore. Here are key trends that AMFI data showed:

Inflows into equity funds lowest since November, but positive for 27th month

Equity mutual funds have witnessed a net inflow of Rs 2,906 crore in May 2023 as against Rs 5,275 crore in April 2023. This was the lowest recorded inflow since November 2022 when Rs 2,224 crore came in. While this was the 27th consecutive month that the asset class garnered net positive flows, when compared to the last couple of months, the quantum of flows has reduced significantly.

Within equities, the highest outflows were seen in the large cap category followed by the focused category and ELSS category.

“Profit booking coupled with concerns regarding the US government’s decision to raise the debt ceiling could have led to investors withdrawing money from these categories during the month,” said Melvyn Santarita, Analyst – Manager Research at Morningstar India.

Small cap funds’ inflows at record high

Among the categories which saw the highest net inflows were the small cap category followed by the midcap category and large and midcap category. Interestingly, the flows seen in the small cap category has been the highest till date.

Both the mid cap index as well as the small cap index witnessed a tepid performance in 2022 on the back of strong performances in 2020 and 2021. Interestingly, investors on the other hand, have shown to be quite persistent when it comes to investing in both these categories. The last time these categories witnessed net outflows was in Feb 2021 for midcap and Sept 2021 for small cap.

Debt funds see sharp decline

Debt oriented schemes witnessed net inflows for the second consecutive month. In May, the segment witnessed a net inflow of Rs 45,959 crore as against the net inflow of Rs 106,677 crore in the previous month. Categories with shorter duration profile were the major contributor towards positive flows for the segment.

Ultra-short duration, low duration and money market funds, on the other hand, witnessed inflows. Credit-risk funds witnessed outflows for the second month at Rs 289 crore in May. These schemes had recorded outflows of Rs 356 crore in April.

SIP contributions hit record high

The Systematic Investment Plan (SIP) saw an inflow of Rs 14,749 crore in May 2023. In April, the same was registered at Rs 13,728 crore compared with Rs 14,276 crore in March, a fresh all-time high then.

Gold ETFs continue to glitter

Gold ETF continue to glitter as it received a net inflow of Rs 103 crore in May. The net inflow was slightly higher in April at Rs 124.54 crore. Gold prices came off its highs towards the second half of May on the back of positive news with regards to the US government raising the debt ceiling thereby providing some buying opportunity, particularly after a sharp rally it witnessed since March this year.

“With gold prices still trading at high levels, some investors would have chosen to book profits or take on risk on approach with a view that central banks would pause further rate hikes. This view seems to be materialising. That said, pertinent risks still engulf developed economies and therefore over the course of the month, investors flocked to gold ETFs which is considered as a safe haven during uncertain times,” Santarita said.

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Key trends from April AMFI data: Equity inflows decline sharply, investors flock to gold ETFs and more

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The April 2023 mutual fund industry data released by Association of Mutual Funds in India (AMFI) highlighted some key insights. While the equity mutual funds witnessed a net inflow at Rs 5,275 crore in April 2023, the total debt scheme saw an inflow at Rs 1,06,677 crore. Here are key trends that AMFI data showed:

Equity inflows decline to lowest in four months

Equity mutual funds have witnessed net inflow at Rs 5,275 crore in April 2023 as against Rs 20,190 crore in March 2023. While all equity mutual fund schemes recorded net inflows in April, small-cap schemes saw the highest investments. Large-cap funds received the lowest inflows, the data showed.

According to Akhil Chaturvedi, Chief Business Officer, Motilal Oswal AMC, the gross flows have reduced in April over March basis recent rally in the markets thereby reflecting cautious stance by investors.

“Having said so, broadly we see the investor interest in equity and equity oriented mutual funds on the rise and medium to long term trend would be positive for the asset class. Also, inflows in the small cap category remained strong in continuation of recent trend. Small caps look reasonably attractive at these levels post the price correction they went through during FY22-23,” he said.

Mayank Bhatnagar, Chief Operating Officer at FinEdge attributed the decline to “profit booking” actions stemming from the lack of patience due to the extended lull in the market, and not having a goal-backed long term return expectation in mind while investing.

“Once again, we are witnessing a repeat cycle of high retail participation at the point of maximum financial risk, and low participation at points of maximum financial opportunity such as the one we are sitting on today. Interestingly, high retail outflows have traditionally signalled trend reversals, so we may well be close to the bottom of the time correction that we have been in since October 2021,” he said.

Debt funds see sharp turnaround

Debt mutual funds witnessed a sharp turnaround in April as they received a huge net inflow of Rs 1,06,677 crore. Except for credit risk and banking and PSU fund categories, all the other categories witnessed net inflows. This came after the category received a massive outflow of Rs 56,884 crore last month,

Liquid funds receive highest net inflows

Categories having shorter maturity profile were the biggest beneficiaries. Liquid funds received the highest net inflows during the month followed by money market fund and ultrashort duration fund category.

While liquid funds saw an inflow of Rs 63,219 crore, money market fund witnessed Rs 13,961 crore inflow in April. The ultrashort duration fund saw inflow of Rs 10,661 crore.

Gold ETFs see inflows

Gold ETFs saw net inflows to the tune of Rs 124 crore in the month of April 2023 after witnessing net outflows in the previous quarter.

“Over the past few months, we have witnessed gold prices rising. While gold prices rose, some investors would have chosen to book profits or take on risk on approach with a view that central banks would pause further rate hikes. That said, pertinent risks still engulf developed economies and therefore over the course of the month, investors again flocked to gold ETFs which is considered as a safe haven during uncertain times,” said Himanshu Srivastava, Associate Director – Manager Research, Morningstar India,

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow